The acquisition means CI1 has met its goal to become a full-service financial technology company for SME clients.

Financing company Credit Intelligence (ASX:CI1) is staying busy on the M&A trail, after announcing an important new acquisition this morning.

The company said it has successfully acquired 60% of fintech lender YOZO Finance for $1.38m in a cash and share deal.

The consideration will be finance in 50 per cent cash and the half in CI1 shares priced at 2.5c each.

Commenting on the deal, CI1 managing director Jimmie Wong said the integration of YOZO will allow the company to build out its product offering and benefit from synergies across its portfolio.

YOZO Finance

YOZO was launched in 2019 following a period of development in collaboration with Dr Guangdong Xu, Director of the School of Computer Science & Advanced Analytics Institute at UTS.

The goal of the company was to create a self-service lending platform based on AI technology.

While short-term cash flow is critical for small businesses, many companies leave themselves ineligible for finance applications due to low credit score or poor account keeping.

YOZO’s service targets that market with a self-service lending platform based on AI technology which provides hassle-free loans with fast approval turnarounds (under half an hour).

The company is working towards launching YOZO Pay, a buy now, pay later (BNPL) solution designed specifically for SMEs to split supplier payments into instalments for improved cash flow management.

Strategic rationale

The acquisition of YOZO broadens the Credit Intelligence offering into a full-service financial technology company with a broad suite of products.

YOZO’s small business loans and BNPL offering complement the company’s existing channels, where it has built market share in secured finance and debt restructuring services as well as mortgage broking and personal insolvency management.

The integration of YOZO will also allow for increased cross-selling among each of CI1’s major verticals – each of which can leverage a larger proprietary database of business customers in need of lending services.

By integrating YOZO’s AI platform, CI1 can “fully digitise our entire offering for more efficient processes, and build a database to up-sell our suite of products to new customers”, Wong said.

In addition, he said the deal gives Credit Intelligence a great opportunity to “diversify our revenue streams, by integrating new financial products to capture more of the fast-growing SME market”.

With a broad cross-section of different products, CI1 is now well positioned from the broader tailwinds driving outsized growth in the global B2B lending market.